How much money you spent on Black Friday?
Many friends of mine bought a lot of makeups and bags. One friend took an online python course, which made me confused, because she is a middle school geography teacher.
I thought it was useless for a teacher to learn python, so I asked her why. She answered that, it might be useful in the future, she was just investing herself.
Investing yourself, this concept has been popular for a long time. Many articles talk about it, saying that investing yourself is spending money on yourself.
Indeed, fluid intelligence (related with memories, numerical skills, reasoning ability) reaches the peak at one’s 20s, so it is wise to invest yourself when you are young. However, does anyone know how to increase revenue of your investment?
Before answering to this question, let’s take a look at the following parts.
What is investing yourself?
What would you do after making some money? You have two choices, save (investment) or spend (consumption). Many people don’t really understand the nature of investment. Actually, it is a future consumption, you will spend this money anyway. How much money we choose to spend or save, is a resource distribution in the dimension of time.
However, not every coin you spend on yourself can be called as “self investment”. In the perspective of return, there are two kinds of money spending. First one is the joy, the good feeling of spending money, because your desire is satisfied. This is called utility of the money in economics. For example, the movie ticket you bought or the bill of a fancy restaurant.
The second one is to keep or improve your ability to make money in the future, which helps you get more income. That is called investing yourself. For example, a good book or an online course.
Though self investment and financial investment can bring you revenue, there’s a difference between them.
Self investment brings you active income, which means you earn money from working hard; while financial investment brings passive income, for example, share dividends and bond interests.
Here’s a chart for a clearer understanding.
It’s easy to calculate your passive income:
Passive Income= Principal x Yield x Investment Horizon
Active income is the similar case:
Active Income= Ability x Productivity x Working Time
Principal is your personal ability, and yield is your productivity.
Now everything is clear, if you want to increase your active income, you have to improve 3 factors according to the formula. The question is how.
- How to prolong working time?
Some of you may wonder, does it mean work overtime?
The answer is NO.
Actually, the “working time” here refers to “active working time”. Though some people work overtime, they don’t spend much time working. Most of the time, they are distracted because of information overload, which greatly reduces active working time.
We have long been used to this age of information explosion, busy texting, blogging and tweeting, and being afraid of missing something important. That’s what we called FOMO, fear of missing out.
If you could be more concentrated, you can surely prolong your active working time.
- How to improve productivity?
Productivity is the utilization of our ability. Two things you should remember regarding productivity: following the trend and doing what you are good at.
Following the trend means that you should seize opportunities during bonus period, or the blue ocean, when the industry is short of talents.
For example, if you are good at driving, you can be a taxi driver, coach driver, even a racer. Back to the time when Uber was booming, you could make a lot of money being an Uber driver. Uber was the blue ocean then, so it was better for you to seize the opportunity to be a Uber driver.
Doing what you are good at means being concentrated on your strong point. You should be aware of that and divide your time appropriately. Most of us are not all-rounders, so just leave the things you are not good at to specialists. Let them do it for you.
In fact, it is not necessary for my friend, a geography teacher, to take python courses. If she needs to write a program for work (not possible actually), she can ask a tech to help.
- How to improve ability?
More principal brings more benefits. Similarly, strong ability brings more active income. According to the US army, talent is the intersection of three dimensions, knowledge, skills and behaviors. We can also use this definition to analyze the ability.
You can not improve more on behaviors, because it is inborn capabilities. However, what you can do is to read more and practice more.
Investing yourself is not an easy thing. You must be hardworking, efficient and willing to learn. Since we are young, why don’t we dare to try and learn more?